Scheme of Arrangement Under Companies Act | Dissenting Creditors Bound by Tribunal-Approved Compromise : NCLAT Upholds NSEL Settlement

The National Company Law Appellate Tribunal has affirmed that a court-approved scheme of arrangement under the Companies Act binds all creditors, including dissenting ones, when it resolves systemic defaults through a structured settlement. The ruling underscores the finality of such schemes and the legal consequences of assigning claims to third parties for collective recovery.

Background & Facts

The Dispute

The dispute arises from the collapse of the National Spot Exchange Limited (NSEL) in 2013, which triggered a payment default affecting over 12,000 traders and investors. The default led to a cascade of civil suits, criminal proceedings under the Prevention of Money Laundering Act (PMLA), and complaints under the Maharashtra Protection of Interest of Depositors (MPID) Act against defaulters, their associates, and brokers. The Respondent, NSEL, proposed a scheme of arrangement to settle claims through a capped payment of Rs. 1,950 crores, funded primarily by its parent company, 63 Moons Technologies Ltd.

Key Facts

• The payment default occurred in July 2013.
• Civil suits, criminal proceedings, and regulatory actions were initiated against defaulters, 63 Moons Group entities, brokers, and their associates from 2013 onwards.
• The proposed scheme was filed before the National Company Law Tribunal (NCLT), Mumbai, as CP(CAA)/104(MB)/2025 on 20.02.2025.
• The scheme was approved by 99.9% of voting creditors by value on 15.10.2025.
• The NCLT approved the scheme by order dated 28.11.2025.
• The Appellant, Nirtex Exports & Investment Pvt. Ltd., is a Specified Creditor holding claims arising from trades on NSEL.
• The Appellant had filed civil suits against consenting brokers in 2014 and 2017, including Commercial Suit No. 48 of 2017 and Representative Suit No. 173 of 2014 before the Bombay High Court.
• The Appellant received Rs. 42,43,970.02 from NSEL by January 2014, which it acknowledged as partial adjustment toward claims against brokers.
• The scheme’s Clause 20.1 and 20.2 provide for automatic release of consenting brokers from all claims upon settlement trigger.
• Clause 21.1 assigns all Specified Creditors’ claims - including those against brokers - to 63 Moons Technologies Ltd.
• The Appellant’s claims represent approximately 42% of the total settlement amount.

Procedural History

• 20.02.2025: Company Petition No. 104(MB)/2025 filed before NCLT, Mumbai.
• 15.10.2025: Scheme approved by 99.9% of creditors by value.
• 28.11.2025: NCLT, Mumbai, approved the scheme and dismissed objections raised by Appellant in CA No. 7/2025.
• 15.01.2026: NCLAT, in Company Appeal (AT) No. 3/2026, upheld the scheme and dismissed objections by LG Tanna Enterprises Pvt. Ltd. and others.
• 09.03.2026: Hon’ble Supreme Court dismissed Civil Appeal No. 1485/2026, affirming the NCLAT’s order.
• 30.03.2026: NCLAT dismissed Company Appeal (AT) No. 34/2026 filed by MMTC Ltd., reaffirming the scheme’s validity.
• 12.05.2026: Present appeal filed by Nirtex Exports & Investment Pvt. Ltd. dismissed by NCLAT.
• 13.04.2026: Supreme Court, in Civil Appeal Nos. 2538-2540 of 2020, directed expeditious implementation of the scheme and set a two-week timeline for deposit of Rs. 1,950 crores into escrow after de-freezing of accounts.

The Parties' Positions

For the Appellant

• Argued that Clauses 20.1, 20.2, and 21.1 of the scheme are illegal as they compel withdrawal of pending civil suits against brokers.
• Contended that the scheme violates the Code of Civil Procedure (CPC) and the Bharatiya Nagarik Suraksha Sanhita (BNSS) by extinguishing judicial remedies.
• Asserted that the scheme is ultra vires Section 230(1) of the Companies Act, 2013, as it binds non-consenting parties and involves extraneous entities (brokers) not part of the applicant company.
• Claimed the scheme violates Article 14 of the Constitution by arbitrarily depriving dissenting creditors of their right to pursue independent claims.
• Stated that the claims against brokers are distinct from those against NSEL and 63 Moons, and should not be subsumed.

For the Respondent

• Argued that the scheme is a commercially negotiated resolution approved by overwhelming creditor majority.
• Emphasized that the claims against brokers arise from the same NSEL payment default and are part of the defined "Specified Creditors’ Claims" under the scheme.
• Highlighted that the scheme assigns all such claims to 63 Moons, which will pursue recovery from brokers and defaulters on behalf of creditors.
• Cited the Supreme Court’s affirmation of the scheme as conclusive on all legal questions raised.
• Noted that the Appellant had already received 42% of its claim and had admitted in its own suit that it had mitigated losses through representative litigation.

Relief Sought

The Appellant sought:

• Setting aside of the NCLT’s order dated 28.11.2025.
• Exclusion of Clauses 20.1, 20.2, and 21.1 from the scheme.
• Permission to continue civil suits against consenting brokers.
• Declaration that the scheme is void to the extent it extinguishes judicial remedies.

The Legal Issue

The central question was whether a court-approved scheme of arrangement under Section 230 of the Companies Act, 2013, can lawfully bind dissenting creditors by assigning their claims against third parties (such as brokers) to a third entity and mandating the withdrawal of pending civil suits arising from the same underlying default.

Arguments Presented

For the Appellant

The Appellant relied on State of U.P. v. Ved Prakash and S. Balachandran v. Union of India to argue that judicial remedies cannot be extinguished by private settlement. It contended that Section 230(6) permits compromise only between the company and its creditors, not with third parties like brokers. It further argued that the scheme violates Article 14 by treating dissenting creditors differently from consenting ones and that the assignment of claims to 63 Moons is an impermissible delegation of judicial rights.

For the Respondent

The Respondent relied on NCLAT’s own judgment in CA(AT) No. 3/2026 and the Supreme Court’s dismissal of Civil Appeal No. 1485/2026 to argue that all legal objections had been finally adjudicated. It emphasized that the scheme was approved by 99.9% of creditors by value, and that the assignment of claims to 63 Moons was a commercial mechanism to ensure centralized recovery. It cited the Appellant’s own admission in Commercial Suit No. 48 of 2017 that it had received partial payment and was pursuing mitigation through representative litigation.

The Court's Analysis

The NCLAT held that the scheme’s validity had already been conclusively determined by its own judgment dated 15.01.2026 in CA(AT) No. 3/2026, which was affirmed by the Supreme Court on 09.03.2026. The Tribunal observed that the Supreme Court had expressly considered and rejected the same legal questions raised by the Appellant, including whether the scheme violated Section 230(1), Article 14, or the procedural safeguards under the CPC and BNSS.

"These aspects have been considered by the Hon'ble Supreme Court before dismissing Civil Appeal No.1485/2026 vide above cited judgement dated 09.03.2026."

The Tribunal further noted that the Appellant’s claims against the brokers were not distinct from its claims against NSEL and 63 Moons - they all arose from the same payment default on the NSEL platform. The definition of "Specified Creditors’ Claims" under the scheme explicitly included claims against brokers, and the assignment of these claims to 63 Moons was a lawful mechanism to consolidate recovery efforts.

The Court emphasized that the scheme was not an attempt to circumvent judicial process but to provide a structured, collective resolution to a systemic failure. The fact that the Appellant had already received 42% of its claim and had admitted to pursuing mitigation through other litigation undermined its claim of prejudice. The Tribunal held that the scheme’s binding effect on dissenting creditors was consistent with the principles of corporate insolvency resolution under the Companies Act, where majority-approved schemes are binding on all.

The Appellant’s reliance on S. Balachandran was rejected as inapplicable, since that case dealt with individual rights in criminal proceedings, not collective commercial settlements under statutory insolvency frameworks.

The Verdict

The appeal was dismissed. The NCLAT upheld the validity of the NSEL settlement scheme dated 28.11.2025, including Clauses 20.1, 20.2, and 21.1. The Appellant is bound by the scheme and cannot pursue civil suits against consenting brokers. All Specified Creditors’ claims, including those against brokers, are assigned to 63 Moons Technologies Ltd. The settlement amount of Rs. 1,950 crores remains binding, and the two-week escrow deposit timeline set by the Supreme Court on 13.04.2026 remains in force.

What This Means For Similar Cases

Judicial Remedies May Be Subsumed in Approved Schemes

• Practitioners must now recognize that court-approved schemes under Section 230 may lawfully extinguish pending civil claims against third parties if those claims arise from the same default and are included in the scheme’s definition of "creditor claims."
• The assignment of such claims to a third party (e.g., a parent company) for centralized recovery is permissible if approved by overwhelming creditor majority.

Majority Approval Overrides Dissent in Corporate Restructuring

• A scheme approved by 99.9% of creditors by value is binding on dissenting creditors, even if they object on constitutional or procedural grounds.
• Courts will not re-examine schemes already affirmed by higher courts unless new facts or legal errors are demonstrated.

Claims Against Brokers Are Not Automatically Distinct

• In cases involving exchange platform defaults, claims against brokers may be deemed part of the same transactional chain as claims against the exchange or its promoters.
• Practitioners must carefully review scheme definitions of "Specified Creditors’ Claims" - they may be broader than anticipated.

Implementation Timelines Are Enforceable

• The Supreme Court’s directive for implementation within two weeks of de-freezing accounts is binding and non-negotiable.
• Parties must act expeditiously to comply with escrow and payment timelines under approved schemes.

The Doctrine of Merger Applies to Scheme Approvals

• Once a scheme is affirmed by the Supreme Court, any subsequent challenge before lower forums is barred by merger.
• The NCLAT correctly held that re-litigating the same issues after Supreme Court affirmation amounts to an impermissible review.